Smart Contract
In 1994, Nick Szabo, a legal academic and cryptographer, realized that decentralized ledgers could be used for smart contracts, or contracts that could be carried out on their own, blockchain contracts, or digital contracts. In this format, contracts can be converted into computer code, stored and then reproduced in the system and monitored by computer networks that undergo the blockhain. This will also produce ledger feedback such as transferring money and receiving a product or service.
Smart Contracts are computer protocols intended to facilitate, verify, or enforce negotiations or the performance of a contract digitally. Smart contracts allow credible transaction performance without third parties. This transaction can be tracked and cannot be changed. Smart Contracts was first proposed by Nick Szabo, who coined the term, in 1994.
By using smart contracts, you can exchange money, property, shares or anything transparently, without conflict and without intermediaries. Smart contracts can provide superior security than traditional contract law and reduce other transaction costs associated with contracts. Various crypto currencies have implemented smart contract types.
The best way to describe a smart contract is to compare it to a vending machine. If you usually go to see a lawyer or notary, then pay for it, and wait to get the required documents. So with smart contracts, you can simply enter bitcoin into the vending machine (in this case ledger) and then your documents can go directly to your account. What's more, smart contracts not only explain rules and penalties like those in traditional contracts, but also automatically ensure that the things in the contract are enforced.
Benefits of Smart Contracts
Autonomy - You make the agreement; no need to rely on brokers, lawyers, or other intermediaries to confirm. And also the terminar is from the danger of manipulation by third parties, because execution is managed automatically by the network, not by one or more, maybe biased, individuals who might be wrong.
Trust - Your document is encrypted in a shared ledger. There's no way someone can say they lost it.
Backup - Imagine if your bank lost your savings account. On the blockchain, each and every one of your friends has your 'back'. Your document has been duplicated many times.
Security - Cryptography, website encryption, keeping your documents safe.
There is no hacking. In fact, a smart hacker is needed to decode and infiltrate.
Speed - You usually have to spend time and documents to process documents manually. Smart contracts use software codes to automate each process, thereby reducing working hours from various business processes.
Savings - Smart contracts save money because they disable the presence of intermediaries. for example if you have to pay a notary to watch your transaction.
Accuracy - Automatic contracts are not only faster and cheaper but also avoid mistakes that come from manually filling out forms.